Elgin Area Chamber Of Commerce: Consumer Sentiment Drops, Deutsche Bank Shuts Russia Operations, Goldman Sachs Lowers Economic Forec

Press release from the Elgin Area Chamber of Commerce:

March 14, 2022

Consumer Sentiment Drops

The latest reading for consumer sentiment fell to a new low in March as inflation rises in the wake of higher prices at the gas pump because of Russia's invasion of Ukraine.

The University of Michigan’s preliminary reading for the month showed a 4.9% decline to 59.7 from February. It is 29.7% lower than a year ago.

“Personal finances were expected to worsen in the year ahead by the largest proportion since the surveys started in the mid-1940s,” Richard Curtin, chief economist for the survey, said in a statement.

At the highest reading since 1981, consumers in the survey expect the inflation rate to continue rising this year. And their expectation for higher gas prices surged the most in decades, according to Curtin. Consumers, however, remained positive about job prospects.

On Thursday, the Labor Department reported that the annual rate of inflation hit 7.9%, led mostly by higher food and gas costs. Excluding those, inflation was at 6.4%, led mostly by used car prices that are at an annual rate of 41.2%.

Deutsche Bank Shuts Russia Operations

Deutsche Bank reportedly is shutting down its operations in Russia, a reversal from what it previously said.

The German bank said on Friday it would wind down operations as part of legal regulator obligations, CNBC reported. On Thursday, the bank had said closing the operations would be practical.

Goldman Sachs and JPMorgan announced Thursday that they would be closing operations. The banks join a growing list of companies that are winding down operations in Russian as it faces more economic sanctions because of the ongoing invasion of Ukraine.

A list from Yale Chief Executive Leadership Institute, which has been tracking which companies have stopped doing business in the country, has grown to 350. Deutsche Bank was still on the list of those continuing to do business in Russia as of Friday but will come off once the list is updated.

There are still some big names still doing business in Russia. Halliburton, whose business includes providing oil production services; International Paper; tiremaker Bridgestone, which has factories in Russia; and sandwich chain Subway.

Goldman Sachs Downgrades Economic Forecast

Goldman Sachs lowered its forecast for U.S. economic activity this year because of inflation and the Russian invasion of Ukraine.

In a note to clients, the bank said it now expects that gross domestic product will grow 1.75% this year instead of 2%.

Goldman Sachs economists gave a 20%-to-35% chance the country enters another recession this year.

"Rising commodity prices will likely result in a drag on consumer spending, as households — and lower-income households in particular — are forced to spend a larger share of income on food and gas," the bank told accounts, according to a CNN report.

But the bank also blamed Russia’s invasion of Ukraine for its more pessimistic view on the U.S. economy. They took a dimmer view of Europe’s economic prospects this year because of the war, lower the region’s GDP growth projections from 3.9% to 2.5%

Source: www.CoStar.com

This press release was produced by the Elgin Area Chamber of Commerce. The views expressed here are the author’s own.